Analyzing Inflation's Effects on Tourism: A Case Study of Jet2holidays

This project examines the impact of inflation on the tourism industry, with a specific focus on Jet2holidays. It begins by defining inflation and its causes, including demand-pull and cost-push inflation, and then assesses its positive and negative impacts on a company's operations and performance. The project highlights the challenges faced by tourism companies during inflationary periods, such as reduced customer purchasing power and potential loss of revenue. The study provides an overview of Jet2holidays, its operations, and its key markets, emphasizing the company's strategies to attract customers. Furthermore, it explores various inflation management strategies that Jet2holidays could deploy to mitigate the negative effects of inflation, such as cost reduction, focusing on long-term benefits, and smart spending. The conclusion summarizes the key findings, emphasizing the importance of understanding inflation's impact and implementing effective strategies to ensure business sustainability.

Project title
Student name
Student ID
Module name
Tutor name
Academic year/ Group

Introduction
Inflation is one of the biggest issues for tourism
industry to grow well. Inflation is the situation where
the prices of goods and services rises and customers
lower down their purchasing power. Inflation
impacts negative outcomes for the economical
growth but sometimes it also act as positive to
control overflow of money circulation within the
country. The main purpose of this poster is to
identify the impact and cause of inflation on an
tourism company and the strategies to mitigate the
issues faced by the chosen organisation.
Key operations and markets
Their main operations is the attract and influence those customers who
prefer to travel from one place to another. They make sure that they will
influence such customers to choose Jet2holidays services. They offer
different destinations with different budgets so that their customers will
choose effectively. They assign agents which collect marketing
information such as current trends in tourism industry and the main
preference of destination from their targeted customers and many others.
These type of information help them to make effective decisions for their
organisation. Their main targeted customers are youngsters because
youngsters prefer more to travel from one place to another and they can
also spend more on their travel9ing activities. They attract their targeted
customers through social media marketing where they upload the
destination pictures and information about their services to attract them.
Conclusion
From the above information it is concluded that inflation is the situation
where the prices of goods and services get raised for a period of time. There
are various reasons for the inflation such as when citizens demanded more
than the ability of economy to produce the goods and services. Another cause
of inflation is when the cost of raw material and wages of workers get raised
then automatically the prices of goods and services raised to cover the overall
cost and earn profit. Company impacted by the inflation because their
customers purchasing power get declined. There are various strategies which
may adopted by companies to work effectively during inflation such as spend
less on unproductive activities.
Inflation management
strategies deployed
It is essential for economy to control their inflation rate.
There are few of the strategies which can be adopted by
Jet2holidays to manage their operations and organizational
performance in case of inflation and these strategies are
mentioned below-
Spend less and earn more- This is the concept which is
required to adopt all kind of business where they have to
work smartly and spend less on their expenditures to earn
more profit. This will happen only when the organization
will sort the list for their productive and non-productive
activities and avoid to spend money on non-productive
activities and invest more on productive activities.
Focus more to earn long term benefit- The companies like
Jet2holidays is required to focus more upon long term
benefits. Hence, in case if they can earn long term benefit
while spending more and have to face loss for shorter period
of time then they must adopt long term benefit over short
term benefit. For example, in case of inflation, if other
tourism organization increases their prices for holiday
packages then Jet2holidays is required to avoid raising the
prices of their holiday packages to gain the trust of their
customers and to attract more customers even if avoiding
raising money provide loss to them.
Spend less on promotional activities and reduce cost- Cost
reduction is one of the best strategy in case of inflation for a
company. In case of Jet2holidays, they are required to spend
less on their promotional activities especially those activities
which charges huge amount of money and they must switch
to social media marketing for promotions and this help the
company to reduce the cost. They are also required to
influence their employees to support the organizational
growth in hard time and make them trusted that they should
work for little low salaries as compared to earlier and when
the inflation time get rid off then the company must promise
to pay them all that part of their salaries which is cut off
during inflation.
Company background and
overview
Jet2holidays is the tourism company within UK
which was founded in the year 2007. It is
headquartered in Leeds, UK. The main area served by
this company are Europe, Turkey and UK. They offer
package holidays to their customers as per their
budgets. They suggest different kinds of destinations
for their customers so that they will choose one out of
various alternatives on the basis of their satisfaction
and budget requirement. Their parent organisation is
Jet2 plc.
References
• Hang, T.T.B. and et. al., 2020. Where Beta is going–case of Viet Nam hotel, airlines and tourism company
groups after the low inflation period. Entrepreneurship and Sustainability Issues, 7(3), p.2282.
• Rae, M., 2022. Protection From Inflation: Examining UK Inflation Measures. In SAGE Business Cases. SAGE
Publications: SAGE Business Cases Originals.
• Van Tuan, P. and et. al., 2021. Marketing Strategies for Tourism and Digital Tech Applications in Tourism
Industry-A Case of Och Tourism Corporation in Vietnam. Design engineering, 7.
• Victor, V. and et. al., 2021. From a recession to the COVID-19 pandemic: Inflation–Unemployment Comparison
between the UK and India. Economies, 9(2), p.73.
• Zhu, S., Kavanagh, E. and O’Sullivan, N., 2021. Inflation targeting and financial conditions: UK monetary
policy during the great moderation and financial crisis. Journal of Financial Stability, 53, p.100834.
Online:
United Kingdom Inflation Rate, 2022 [Online] available through:
HYPERLINK "https://tradingeconomics.com/united-kingdom/inflation-
Inflation rate is the percentage of increase in prices of goods and services within a fixed period of time.
High inflation rate basically impacts negative to for economical growth because during high inflation period
most of the customers avoid to buy normal goods and services and they only prefer to buy those goods and
services which are essential for them to live their life. Hence, they spend more on healthcare and essential
food and shelter. Recently, the annual inflation rate is measured as 9.9% in UK (United Kingdom Inflation
Rate, 2022). It is considered as high rate of inflation and the main cause of this rate is COVID pandemic.
Due to this pandemic most of the companies get shut down and exit the industry. The few which left has
increased the prices of their goods and services to cover the losses which they had faced due to the
pandemic. The prices of almost every good and prices increases during inflation period. There are few main
causes of inflation period which is mentioned below-
Demand-pull inflation- Some times the local citizen of a economy demanded more than the supply of the
good and services and companies are unable to produce those goods more than a fixed limit. Hence, to
make a balance between the demand and supply, economy increases the prices of those goods and services
which further impact on other goods and products and this is how the inflation takes place. After noticing
that the prices are raised up for the goods which are demanded more in the economy, a large number of
customers especially price sensitive customers step backward to demand the product. For example, in case
Jet2holidays got more request from one specific location and they are having no further facilities for that
location then they start charging more prices to that location which are demanded more so that their
customers will switch to other location with the preference of same tourism company.
Cost push inflation- Here, the cost of manufacturing goods get increased due to increment of wages and the
prices of raw material. There is no other option for companies to increase the prices of their goods and
services to cover all the cost and earn profit. For example, in case a tourism company increases the wages of
their workers then they are also required to increase the prices of their holiday packages to cover the cost
and earn appropriate profit. In case of restaurants, if their suppliers increases the cost of their vegetables and
fruits then the restaurant is forced to increase the prices of food dishes mentioned in their menu.
Increased money supply- One of the another popular cause of inflation is government interference.
Sometimes, government and especially central bank notices that the money circulation is more than they
expected to maintain the growth of the country. Hence, here, government increases the prices of goods and
services within the country to control the circulation of money.
Inflationary periods and main causes
Impacts of inflations on company’s operations and
performance
Inflation impacts both positive as well as negative upon the organizational operations and
their overall performance. In context of inflation, their customers may avoid to use
travelling services and they prefer to save their money for future essentials. Hence, it
might be possible that they may face loss in inflation condition. On the other hand,
Jet2holidays may also fire few of their employees to cut down their cost in inflation
situation. These employees are those employees who are not the high performers. But
this may ruin their brand image as the fired employees may provide negative review
about the work culture of the company. In case of positive outcomes then inflation help
the company to earn more from those customers for whom the travelling is essential. For
example, a customer have to travel from one destination to another to attend a business
meeting. Then in this case whether the company charges high or low, the business
individual have to reach the destination essentially. Hence, such kind of customers help
the company to earn more for their organizational growth. .